LYELL STRAMBI: Over the next four years there are 22 months with no scheduled maintenance at Avalon for our 747 aircraft.

RACHAEL BROWN: Mr Strambi says Qantas looked at taking work from other facilities and airlines, but it would've damaged the airline's competitiveness.

RACHAEL BROWN: But the unions say Qantas just wants to move more work offshore.

STEVE PURVINAS: They very conveniently talk about 747 aircraft that are predominately maintained here, but this workforce is more than capable of working on 737 aircraft, they're qualified, they've been working on those planes for years and we've got a facility up in Brisbane, the only one left that Qantas has in Australia that is about 500 people short for the planned work over the coming years in that facility.

RACHAEL BROWN: Steve Purvinas from the Licensed Aircraft Engineers Association says maintenance will instead be carried out in countries like Singapore, Manila and Hong Kong, which he says is dangerous.

STEVE PURVINAS: The aircraft do not come back in the same condition as they left our shores.

RACHAEL BROWN: The Prime Minister, Tony Abbott, has described the announcement as tragic, but a commercial reality.

TONY ABBOTT: Whether it's the corner store or an iconic employer like the Qantas, it is alwaystragic when a business sheds staff - on the other hand in the end these are decisions that business do have to make.

RACHAEL BROWN: Tony Webber was the chief economist at Qantas, now he's an aviation consultant. He says given the financial pressures on Qantas, killing its Avalon maintenance base will only have a marginal effect on its bottom line.

TONY WEBBER: Qantas international, I estimate about 17 per cent, their unit costs are about 17 per cent above their peers, and even the Jetstar business, even the costs are about 15 per cent above their peers.

To reduce that gap they need to make significant structural changes across their whole business and this is just a small step in that direction.

RACHAEL BROWN: Mr Webber expects Qantas will remain an international carrier over the next decade, but will continue to bleed money.

TONY WEBBER: It's very difficult for them to shift their cost base because 30-40 per cent of it is labour costs and around 30 per cent of it is fuel costs, and it's very difficult to take those costs out of business because they're must haves.

RACHAEL BROWN: Meanwhile, workers trudging out of the base this morning are staring down redundancies or relocation.

QANTAS EMPLOYEE: Put it this way I'll be moving out of Geelong cause I think Geelong's in trouble personally, I think we're all going to struggle to find work after this.

QANTAS EMPLOYEE: If we want to keep in this industry then we'll have to move.

QANTAS EMPLOYEE: I'm 54 next year, it ain't going to be easy.

RACHAEL BROWN: Geelong is a part of Victoria that can least afford bad news. In the past year, jobs have been shed at Boral and Target. A thousand are on the line at Alcoa and Shell and Ford's closure in 2016 will cost another thousand jobs.

But some publicans and industry heads in Geelong say the city knew this was coming.

Chairman of the Costa Group, Frank Costa, has lived in the city for 75 years.

FRANK COSTA: Since the late 1990s when Geelong was getting to be a basket case after the loss of Pyramid and really high unemployment, there's been a strong move down there to get off our backsides and do things for ourselves.

And we had a good example of what was happening up in Newcastle, they were in a very similar situation after losing the steel industry and they've reinvented themselves and we're doing very much the same.

RACHAEL BROWN: Mr Costa says tourism continues to boom, a new hospital is being built and another two are expanding, and other industries are gathering strength, such as education and research.

FRANK COSTA: Deakin University, they brought the medical school into Geelong and they've got a big research division out at Waurn Ponds that is working very heavily on carbon climate and they've made some very big breakthroughs and (inaudible) when I was working in from Russia after what we believe is a very successful trip talking to Russian businesses that want to come out to Australia, want to come to Geelong.

PETER LLOYD: Thatís Frank Costa from the Costa Group speaking there with Rachael Brown.